Question: Hardhat Construction Company has a contract to construct a 4,500,000 bridge at an estimated cost of 4,556,250. The contract is to start in July 2019,
Hardhat Construction Company has a contract to construct a 4,500,000 bridge at an estimated cost of 4,556,250. The contract is to start in July 2019, and the bridge is to be completed in October 2021. The following data pertain to the construction period.
|
| 2019 | 2020 | 2021 |
| Cost to date | $ 1,000,000 | $ 2,916,000 | $ 4,556,250 |
| Estimated cost to complete | 3,000,000 | $ 1,640,250 | - |
| Progress billing during the year | 900,000 | 2,400,000 | 1,200,000 |
| Cash collected during the year | 750,000 | 1,750,000 | 2,000,000 |
REQUIRED:
a) Using percentage-of-completion method, prepare schedules to compute the profit and loss to be recognized as a result of this contract for the year ended October 31, 2019, 2020 and 2021.
b) Using cost recovery method, prepare schedules to compute the profit and loss to be recognized as a result of this contract for the year ended October 31, 2019, 2020 and 2021.
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